Reader:
My mum’s insurance agent sent this. Would you consider this ILP? It’s also being marketed at an event at the sports hub…

AK:
Generally, I would say to anyone not touch ILPs even with a 5 feet pole.

However, ILPs are especially unsuitable for older people as the cost of life insurance jumps after age 55 and from age 60, it becomes very costly.

This is because mortality risk increases as we age.

In an ILP, the cost of insurance is deducted from the policy value by selling units.

As we age, the cost of insurance goes up and in our golden years, it goes up more rapidly.

So, imagine units in the ILP being sold down more rapidly to pay for the cost of life insurance as we age.

Unless the unit price of the ILP goes up more rapidly and significantly than the increase in deduction, when the value of the ILP becomes zero …